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The national government unilaterally terminates the Protocol expansion guarantee structure social housing (1999)

The national government unilaterally terminates the Protocol expansion guarantee structure social housing (1999)

On 4 June 2014, the government further explained its vision concerning people with care needs living independently for longer in a letter to Parliament. This letter also includes a passage concerning the status of the Protocol expansion guarantee structure social housing from 1999 (the Protocol). The passage is not very clear. A spokesperson for the Ministry has explained that the passage should be interpreted in the sense that the Protocol no longer exists. This means that associations are deprived of an important possibility to invoke the compensation scheme included in the Protocol. The financial consequences may be considerable. Rotterdam association SOR alone has already held the national government liable in this connection for an amount of €25 million. It is likely that it will involve several hundreds of millions of euros sector-wide. It is just a matter of time before the first procedures will commence.

Protocol
Many care institutions who have leased their healthcare-related property from associations have concluded a lease that is based on the model lease from April 2004 published by Aedes-Arcares, the knowledge centre for housing and care. This model was intended in particular for intramural healthcare-related property and assumed in principle rental periods of at least 20 years. The model lease included a provision on the basis of which the national government would compensate damage sustained by housing associations as a result of early termination of the lease ‘as a result of government decisions’. The parties were required to invoke the Protocol for this purpose.

The Protocol is a private-law agreement concluded in June 1999 between the national government, the association of Netherlands municipalities (VNG), the Social Housing Guarantee Fund (WSW) and Aedes. The Protocol provides that WSW takes over the risks for care homes and provides new guarantees for the financing of care homes. In exchange, the Minister of Health, Welfare and Sport (VWS) granted compensation (restructuring compensation) to the relevant association concerning a closure approved or imposed by the Minister. As a result, WSW was willing to guarantee the loans taken out by associations to acquire care homes and the associations were willing to take over the risks of the care homes.

It follows from the Protocol that the restructuring compensation not only applies in the case of a closure approved or imposed by the Minister on the basis of a government decision, but also in the event of the reduction of the capacity of a care home pursuant to a government decision. The problem is that legislation and regulations have changed since 1999. The Minister formerly had the power on the basis of Section 18a of the Hospital Provision Act to close down a care home or reduce the number of beds or places in a care facility by a number to be indicated by the Minister. This Section was repealed on 1 January 2006. It was not replaced with a comparable Section. The Minister of Health, Welfare or Sport does have the power to withdraw or (further) limit the accreditation of a care institution on the basis of Section 14 of the Care Institutions Accreditation Act.

All of the above does not alter the fact that as a result of the extramuralisation of the minor care intensity packages (laid down in several orders in council of the Ministry of Health, Welfare and Sport) care institutions are currently required to close down many care homes or drastically reduce the bed capacity. Although this is not a direct result of a restructuring decision on the part of the Minister, it is a result of changed government policy. The Minister nevertheless takes the position that her policy concerning the extramuralisation cannot be equated with adopting a closure decision as referred to in the Protocol. In doing so, the Minister merely follows the literal text of the Protocol. This means, in my opinion, that the Minister fails to recognise the intention of the parties when they signed the Protocol in 1999, namely the creation of a compensation scheme in the case of a closure or a reduction of capacity of care homes as a result of ‘government decisions’. It is important in that connection that the national government itself allowed the Minister’s power to adopt a restructuring decision to lapse in 2006.

Letter to Parliament dated 4 June 2014
On 4 June 2014, in a Letter to Parliament the government dealt with the status of the Protocol as part of its vision concerning people with care needs living independently for longer and support thereof by the government. The passage concerning the Protocol is not very specific. The government merely observes that it follows from the Protocol that the housing associations can invoke the compensation scheme in the event of a full or partial closure of a care home approved or imposed by the Minister of Health, Welfare and Sport, but that the Minister’s power to impose this closure has not existed since 1 January 2006.

A spokesperson of the Ministry has indicated that the passage in the Letter to Parliament concerning the Protocol may be interpreted in the sense that the national government is of the opinion that the Protocol no longer applies (see the article ‘Rijk komt afspraak niet na’, Trouw daily newspaper, 6 June 2014). If the government intended to indicate that it unilaterally terminated the Protocol from 1999, the government fails to recognise that the Protocol does not contain a termination arrangement or period. It is an established fact that the government also did not observe a notice period, let alone that the Protocol was formally terminated. It is therefore likely that associations can still successfully claim compliance with the Protocol.

It cannot be excluded that the government’s spokesperson intended to indicate that the Protocol still exists, but that it can no longer actually be invoked because the Minister no longer has the statutory power to adopt restructuring decisions. The Protocol would therefore be no more than a dead letter. This means that the Minister apparently fails to recognise that the current closure of care homes or the reduction of bed capacity of care homes is a direct result of changed government policy. It is therefore arguable that this concerns a ‘government decision’ to close down or reduce capacity as referred to in the Protocol. The reason that the government does not wish to concur with this position is obvious: the national government is afraid that the associations will be able to successfully invoke the compensation scheme of the Protocol as a result of this changed policy. The financial consequences may be considerable. It will involve several hundreds of millions of euros sector-wide.

By Robert Rijpstra

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